Hi All! Could you please tell me the difference between TDS & TCS and their application?
From India , Delhi

TDS is Tax Deducted at Source while TCS is Tax Collected at Source.

Tax Collection at Source or TCS, as the name implies, means collection of tax at source by the seller or collector, from the buyer of the goods. As prescribed under Income Tax Act 1961, it is mandatory on the part of the buyer to pay a predetermined value of TCS to the seller, while purchasing a particular commodity.


• Buyer Means a person who obtains in any sale, by way of auction, tender or any other mode, specified goods, or right to receive any such goods

• but does not include

1. Public sector company,

2. Central/state Government,

3. Embassy,a high commission,legation,consulate and the trade representation of a foreign state and

4. A club

5. A buyer in the retail sale of such goods purchased for personal consumption so goods purchased by consumers are not covered under TCS

Taxpayer pays tax on income earned in previous year.Sometimes, such income is not reported and as a means to overcome such problem, government deducts tax from the amount of income receivable. The amount of tax deducted is called Tax Deducted At Source or TDS.


Income gained through several sources falls under the tax deduction at source or TDS scheme. Some of such income that is subjected to ‘Tax Deduction at Source’ is as follows:

• Salary.

• Interest.

• Rental fee.

• Interest on Securities.

• Insurance commission.

• Dividends from shares and UTI/Mutual Funds.

• Commission and brokerage.

• Prize money won from lotteries, horse races, etc.

• Payments to non-resident sportsmen or sports associations.

• Commission on sale of lottery tickets.

• Fees for professional and technical services and the like.

• Compensation for compulsory acquisition.

• Income from units of an offshore fund.

• Income from foreign currency bonds or shares of Indian Companies (unless specified as tax-free).

From India , Calcutta
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